China Poised To Overtake U.S. & Japan In iOS Revenue Within The Next Year

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Apple’s lead over Google when it comes to revenue generated by the companies’ respective mobile application markets, the App Store and Google Play, has been cemented, according to a new report out today from App Annie. And this continues to be true even though Google Play is now leading when it comes to downloads, the firm found. In 2014, Google Play had a 60 percent download lead over iOS. In 2015, this widened to nearly 100 percent.

A large part of iOS’s revenue lead is due to China, a country that has already topped the U.S. in iOS downloads, and has been narrowing the gap on the revenue front as well.

With regard to Google Play, however, it’s winning on downloads, but not on apps’ ability to make money.

Google Play’s increase in downloads is being attributed largely to Android’s growth in emerging markets, including Brazil, India, Indonesia, Turkey and Mexico. Combined, these countries accounted for almost half of Google Play’s year-over-year download growth, the report notes.

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With that growth came some increase in revenue, but iOS continued to outpace Google Play thanks to its traction in China. As App Annie reported this past October, iOS’s App Store revenue was 80 percent higher than Google Play, even while worldwide downloads were 90 percent on the Android app store versus Apple’s App Store.

Over the course of 2015, iOS’s revenue growth was driven by China, as well as the U.S. and Japan – the three countries accounting for nearly 90 percent of the Apple App Store’s year-over-year revenue growth.

But China in particular has a lot to do with the Apple App Store’s revenue situation.

In 2014, China was the second-largest country for iOS downloads, and then in Q1 2015, it overtook the U.S. to claim the top spot. From Q1 2014 to Q4 2015, iOS downloads in China grew by 20 percent – growth that has been influenced by China’s adoption of Apple’s larger screened devices, the iPhone 6 and 6 Plus.

The country’s preference for phablets is mirrored by the industry at large, other recent reports have found. For example, Flurry (who once called “phablets” a fad), ate their words, noting that for the first time in 2015, consumers were opting for the big-screened devices over smaller phones.  And they doubled their share of new device activations the week before Christmas, growing to reach 27 percent – an indication of strong phablet holiday sales.

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App Annie’s report also dips into how app categories influence revenue. For instance, games are very popular in China and revenue from games doubled from 2014, the report found. In 2015, games accounted for nearly 95 percent of total iOS revenue in China.

That puts the country in the third position behind the U.S. and Japan for iOS revenue – and App Annie now believes that China could surpass both countries within the next year to claim the number one position.

Google Play, meanwhile, may not have led on the revenue front, but it is getting a significant foothold in emerging markets, as noted above. Google Play’s share of combined iOS and Google Play downloads grew from 45 percent in 2014 to 55 percent in 2015, with games driving a big portion of those numbers. In 2015, Google Play downloads were 1.5 times that of iOS downloads, up from nearly even values the year prior.

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“While Android is making inroads on Apple’s U.S. market share, its revenue lags. Google must continue to evolve its strategy to help drive more revenue for its developers,” the report states. “That said, Android market share needs to grow at the high-end of the smartphone market to meaningfully drive more revenue.”

The full report, available from App Annie’s website also tracks other trends that took place over the course of the past year, including those with ridesharing apps, dating apps, video streaming, mobile shopping, gaming, wearables and more.